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Michigan Long Term Disability Insurance Discretionary Clauses voided by Court

Recently, the US District Court (Judge Richard Enslen) upheld the Michigan Insurance Commissioner’s right to prevent any Long Term Disability Insurer from including discretionary clauses in their insurance contracts in the case American Council of Life Insurer’s v Waters.

This could be a tremendously important decision for anyone with a long term disability claim. For years now the insurance companies have included clauses giving themselves the discretionary authority to interpret and enforce the provisions of their own insurance policies. The natural result of this power grab was to restrict the Court’s ability to review the appropriateness of the insurance companies decisions. As a result countless otherwise meritorious claims were denied. The insurance companies racked up huge profits while the individuals who filed claims lost their homes and were forced into poverty.

It remains to be seen whether this well reasoned decision is upheld on appeal. The AARP filed an amicus brief in support of the Michigan Insurance Commissioner.